New Employment Growth Path
New Employment Growth Path
• Consideration should be given to changing the
name to New Employment Growth Path as
employment creation is the main objective. In
addition, the South African experience
provides ample evidence that higher
economic growth will not necessarily translate
into sustainable jobs growth.
New Employment Growth Path
• 2) The government’s objective is to create 5
million jobs over 10 years. The channel of job
creation is via higher economic growth. Thus, job
growth should follow from higher economic
growth. As stated in 1) above, it is not a certainty
for high economic growth to generate more jobs.
Job creation is influenced by many factors and is
not a prerequisite for economic growth. The use
of capital and technology can also be drivers of
economic growth.
New Employment Growth Path
• 3) The government states many options as to how to achieve the
target of 5 million jobs. It ranges between 4% growth to 7%
growth. Though not explicitly stated in the document, the
government has publicly stated that it prefers the 7% option. This
means that the government does not prefer the option of
increasing job absorption, in other words the employment
intensity of growth. What this means is that the government
prefers the option of 0.5% growth in jobs for every 1% economic
growth. Opposed thereto, if job absorption can be improved to
0.75%, only 4% growth will be needed to create 5 million jobs. This
option will reduce the pressure on economic growth to rocket, but
will reduce poverty. Furthermore, if the economy can growth at
7% and job absorption is increased to 0.75% some 8.5 million jobs
can be created making a severe dent into unemployment and
poverty.
New Employment Growth Path
• The main problem is that the New Growth
Path is a framework without clear purpose, no
empirical research to determine why
unemployment remains high and no evidence
based testing to determine the policy options
with the highest probability of achieving
whatever the objective is